WHy are we in debt?

[AlphaIVT]

i was reading some of gore's stands on the budget issue and he wants to pay off $3T to down AMerica's debt. What is our debt to?

 

[Windogg]

Ourselves, Each time the US has a defecit, it take a loan out against itself to pay it. The money is from the sales of long and short term treasury bonds. The reduction of debt would be to buy back these bonds and retire them.

Windogg

 

[AlphaIVT]

Our debt is to ourselves then?

 

[zippy]

Alpha, yes. We owe ourselves a LOT of money.

 

[AlphaIVT]

cool, I kept thinking that we were in debt to another country, but then I never remembered another country helping us, we always helped them!

 

[Windogg]

Take for example, the budget is 1 trillion and the goverment spends 1.1 trillion. At the same time tax revenues are only 900 billion.

There is a 200 Billion shortfall. The government then issues bonds or other debt to cover the difference. Then it pays interest just like any other loan. It also gets highly possible that there is too much shortfall to cover the interest payments. After that more bonds are issued on THAT debt.

then there is other debt owed to Social Security and other sources. Money earmarked for SS is ofter used to pay debt. The US goverment actually owes quite a bit to the fund for all the loans taken against it.

It gets really weird huh?

Windogg

 

[saxman]

AlphaIVT, actually a lot of other countries own many of these bonds.

 

[kranky]

We don't owe all the debt to ourselves. Each American's share right now is over $20,000, with a current national debt of about $5.7 trillion.

At the end of 1997 (latest data I could find), foreigners owned $1.8 trillion of U.S. debt, and chances are great it's much higher today, three years later. I'd guess (in round numbers) that foreigners own about half of the US debt.

The risk we have is that for whatever reason those other countries decide some day they don't want to be our bankers any more, and sell our bonds. The value of the dollar would drop, and things we buy from other countries would go up, causing inflation.

 

[Killbat]

You all don't REALLY want the debt paid off, do you? :Q Believe it or not, it's good for this country to run on a debt (even though it may be a tad too large).

 

[Windogg]

Yes a little debt is good. Alexander Hamilton wanted debt to help the country build it's credit.

Windogg

 

[erub]

Uhh, America has good credit now - who wouldn't loan the most powerful nation in the world some $ now? Back in Alexander Hamiliton's days, America was a weakling nation. That's why he wanted to pay off all the debt to build our credit

 

[piku]

The one thing that I always think when I see debt numbers is - can we trust them?

Who says that the are in debt? The government? What are they going to do, audit themselves?

We really have no idea how in debt we really are. We could be 5x more in debt, could have been running on a surplus for the past 50 years. Who knows?

 

[jjm]

piku - Pick up any financial newspaper and you can look up all the Treasury debt outstanding. No, there is not a conspiracy here. There really is debt outstanding. And most of it is owned by Elvis.

 

[piku]

And who do the papers get those numbers from?

Yeah, thats right



not that I really believe its a huge conspiracy, but it could be

 

[kranky]

<< Uhh, America has good credit now - who wouldn't loan the most powerful nation in the world some $ now? >>

Why do some millionaires go bankrupt? Because when times were good they overextended themselves, and when times got tough they had no cushion.

If we aren't going to pay down our debt in times of prosperity, when would we be able to do it? When times are bad?

 

[IBhacknU]

I remember there used to be a website devoted to 'counting' the national debt. It was a counter like you'd have on a web page, but it kept increasing at a HUGE rate.

Can't find the link to it. Any help?

 

[IBhacknU]

here's one link I found, but not the counter I was talking about:

http://nationaldebt.com/total_national_debt.html